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Are you Considering Moving MIP to the Cloud? Contact FTM for help

Did you know within MIP there is more than one cloud option available?

We continue to see more of our MIP users migrate to the cloud so contact us for our help.

Some of the primary reasons our clients have moved to the cloud include the following:

  • Secure access to information and data from anywhere
  • Software updates are performed automatically
  • Fewer expenses for hardware and IT related costs.  Also, no large capital expenditures
  • SSAE 16 compliant data centers that are typically more secure and reliable than  on-premise installations
  • Data that is easily available in case of a natural disaster or emergency
  • More timely backups to avoid and minimize data loss

For more information about the MIP cloud or hosting options, please contact Jim Simpson at jsimpson@ftmllc.com or 317.819.0780 for a FREE review and quote.

Common Form 990 errors for Nonprofit Organizations

Many Forms 990 are prepared incorrectly or incompletely.

Because the Form 990 is a public document — nearly all are posted on GuideStar.com and many organizations post them on their websites — it is important that the Form 990 be prepared completely, correctly and consistently.

An incorrect Form 990 could reflect negatively on the organization when reviewed by possible donors, the community or even the media. More importantly, an incorrect Form 990 might be viewed as an incomplete filing by the IRS, subjecting the organization to late filing and other penalties even though a Form 990 was filed.

Here are some of the most common errors we have encountered.

Missing the deadline. The 990 is due on the 15th day of the 5th month after the organization’s year-end.  That means May 15th for calendar year organizations and November 15th for organizations with a June 30th year-end.  There is a 6-month extensions available but this has to be filed by the deadline.  Final deadline after all extensions is November 15th for calendar year-end organizations and May 15th for June 30th organizations.  Late filing fees can be as high as $50,000.  Failure to file for 3 consecutive years results in loss of exempt status.  If the organization has unrelated business income, it must file an extension for the 990 and a separate extension for the 990-T.

Filing an incomplete return.  The IRS can consider an incomplete return as never filed in which case late filing penalties up to $50,000 can apply.  Missing schedules is one of the most common reasons for incomplete returns.  Listed below are some of the most common schedules.  Keep in mind that some schedules only apply to organizations filing a 990 and some schedules apply to both the 990 and the 990-EZ.

  • Schedule A – Required of all public charities
  • Schedule B – Required of organizations that received donations of $5,000 or more from a donor
  • Schedule C – Lobbying activities are reported in this schedule
  • Schedule D – Most common reasons for filing this schedule are fixed assets, endowment funds, escrow funds, and/or audited financial statements.  Endowment funds includes those administered by someone else such as a community foundation.  An example of escrow funds is security deposits from building tenants.
  • Schedule G – Required if the organization had over $15,000 in expenses for professional fundraisers (not employees) or if it had over $15,000 in gross income from either fundraising events or gaming activities.
  • Schedule I – Required if the organization gave more than $5,000 in grants and contributions to other organizations or individuals in the United States.  Schedule F is completed if the grants were given to organizations or individuals located outside of the United States.
  • Schedule M – Required if the organization received over $25,000 in donated non-cash contributions.  Common mistake is not realizing that donated stock is considered a non-cash contribution.
  • Schedule R – Required if the organization was related to any other organizations or if it owns 100% of a disregarded entity.

Voting members of the governing body.

Line 3 of Part I asks for the number of voting members of the governing body.  This should be the number as of the end of the organization’s year end.  For a calendar year organization, this is the number of voting board members at December 31.  This number should never be more than the number of board members listed in Part VII.  Part VII should include the name of any individual that served on the organization’s board at any time during the fiscal year.  There may be individuals listed in Part VII that were not board members as of the last day of the organization’s year but served earlier in the year.

New significant programs.

Line 2 of Part III asks if the organization took on any significant program services during the year which were not listed on the prior form.  Nonprofits need to check this box yes and provide a description for any new programs that began during the year.  When an organization applies for tax-exempt status, it must describe its program services in its application for exemption.  It is important the nonprofit notify the IRS of any new programs so that the IRS can ensure that these new programs coincide with the organization’s exempt purpose.  The IRS may be able to challenge any new programs as unrelated which could result in unrelated business income taxes.

Policies.

Part VI asks if the organization has various policies in place.  Nonprofits will not lose their exempt status simply because they do not have these policies in place; however, it is best practices to have them.  Two of the questions address provisions of the 2002 Sarbanes-Oxley Act.  Although most provisions of the Sarbanes-Oxley Act apply to public companies, two provisions apply to nonprofit organizations – a whistle-blower policy and document retention and destruction policy.  In addition, if a nonprofit is required to file Schedule L, Transactions with Interested Persons which reports financial transactions or arrangements between the organization and disqualified persons, there should be a conflict of interest policy in place.

In-kind.

Donated services and facilities should not be recorded in Part VIII as revenue or in Part IX as expenses.  Items such as donated advertising or the use of materials, equipment or facilities are recorded in the organization’s financial statements prepared using generally accepted accounting principles but they are excluded from Form 990.

FORM 990, PAGE 1, PART I

Page 1 of Form 990 includes summary information relating to the organization and creates a first impression for the reader.

Organizations should consider a concise description that fits in the allotted space on the first page, so the reader can gain a clear idea of the organization’s most significant activity without searching through the voluminous disclosures in Schedule O.

Part I of Page 1 also includes summary information regarding the number of voting board members, employees and volunteers. Unpaid board members are considered volunteers for purposes of reporting the number of volunteers on Page 1.

Organizations with unpaid board members often fail to count them as volunteers on Form 990.

FORM 990, PART VI

Total members of the governing body and total independent members of the governing body are often counted incorrectly on Form 990.

The IRS instructions ask for the total number of voting members of the governing body, which may not be the same number listed in Part VII of Form 990.

In addition, the concept of independent members of the governing body is defined differently for purposes of Form 990 completion. Often, members of the governing body who are compensated for services performed outside their service as a board member, as well as members of the governing body who have interested person transactions reported on Schedule L, are counted as independent board members in error.

Business and family relationships often are not disclosed as required in question 2. Exempt organizations that have large numbers of board members — more than 20 — or are located in rural areas are likely to have a business or family relationship with fellow board members. This question is often answered “no” in error.

FORM 990 PARTS VIII & IX

While reporting revenue and expenses of an exempt organization should be routine, many times items of revenue or expense are not properly reported. Common reporting issues include:

  • Reporting fees paid for services rendered (contract services) incorrectly.
  • Contributions and revenue reported in the incorrect column.
  • Security sales, fundraising and/or gaming events not reported properly.
  • Incorrect or lacking allocations of a reasonable amount of expense to either management G&A or fundraising expense.

SCHEDULE A PUBLIC CHARITY STATUS

Schedule A reports the public charity status of an organization. Many times, organizations select the wrong public charity type in Part I. For organizations classified as publicly supported, one of the public support tests included in Part I or Part II must be completed.

These computations often are completed inaccurately with incorrect amounts reported throughout. A common error is the omission or incorrect computation of excluded support on Line 5 of Part II or Line 7 of Part III.

SCHEDULE L TRANSACTIONS WITH INTERESTED PERSONS

Schedule L reports a variety of transactions with interested persons. Many organizations define interested persons too narrowly and only inquire as to possible transactions with board members.

Interested persons are defined differently depending on the type of transaction reported on Schedule L, and inquiries regarding these transactions should include not only officers, directors and trustees but also key employees, highest-paid employees and, in some cases, certain donors.

Organizations should take care to inquire about interested-person transactions regarding all interested persons.

Once a transaction with an interested person is identified, the organization reports certain information in Schedule L. Business transactions tend to be the most often reported transaction on Schedule L. Part IV requests the name of the interested person (and not the ODTKE), the relationship and amount of the transaction. In many cases, the ODTKE of the organization is reported in error as the interested person.

SCHEDULE O MISCELLANEOUS DISCLOSURES

Schedule O is used to provide required disclosures based on the answers to certain questions contained in the core form of Form 990. The disclosures range from expanded program service descriptions and internal Form 990 review processes to availability of certain documents for public access and compensation-setting processes.

Often the disclosures are incomplete, not updated for current reporting information or so lengthy the purpose of the disclosure is lost to the reader.

Care should be taken to read each disclosure to ensure it answers the question or describes the issue completely, correctly and concisely.

Please contact us to review your current Form 990 for any errors or let us prepare your Form 990 and we will make sure you comply with the IRS requirements.  Also, we work with our clients on a daily basis so we typically know the organization very well which also contributes to a better prepared return with little effort from our busy clients.

 

 

Common Financial Statement Errors for Not-for-Profit Entities

The following series is a listing of some of the financial statement errors found in Not-for-Profit organizations.   I have broken it down by the different financial reports.

The Statement of Financial Position which is commonly referred to as a Balance Sheet may have the following financial statement errors:

  • Display of current/noncurrent assets without displaying current/noncurrent liabilities when a classified statement is used.
  • Improperly including items in cash and cash equivalents, such as cash held or other assets that are restricted or not available for current use.
  • Failure to report cash, contributions receivable, and other assets that are restricted for a long-term purpose separately from unrestricted cash and cash equivalents, contributions receivable or other assets.
  • Recording deferred revenue for amounts received under a “grant” instead of recording temporarily restricted revenue in circumstances where the “grant” is, in substance, a temporarily restricted contribution and not a true cost-reimbursement arrangement.
  • Improper reporting of beneficial interests in assets or net assets held by others, such as in the instance of an entity transferring assets to a community foundation and naming itself beneficiary.
  • Failure to distinguish between operating leases and capital leases and apply the proper accounting under the circumstances. A capital lease is recorded as both an asset and a liability on the statement of financial position. An operating lease is not reported on the statement of financial position and is expensed as incurred.
  • Missing one or more of the required totals: total assets, total liabilities, total net assets, permanently restricted net assets, temporarily restricted net assets, and unrestricted net assets.

The Statement of Activities which is commonly referred to as an income statement or statement of revenues and expenses may have the following financial statement errors:

  • Improperly releasing temporarily restricted net assets that are subject to both a time and purpose restriction when one, but not the other, restriction is met.
  • Reporting revenues from exchange transactions as increases in restricted net assets. Only those revenues related to contributions with donor-imposed restrictions can result in restricted net assets.
  • Reporting amounts receivable under a cost-reimbursement contract/grant as temporarily restricted (may be legally limited as to use, but it is an unrestricted activity for which unrestricted costs have been incurred).
  • Recording amounts as a receivable under cost-reimbursement contract/grant for which costs have not been incurred.
  • Failing to properly classify revenue transactions (or portions thereof) as contribution or exchange transactions.
    Improperly including expenses in temporarily or permanently restricted net assets. Expenses should decrease unrestricted net assets.
  • Erroneously reporting just one program service function when the NFP has more than one major class of program services. For example, an NFP may have programs for health or family services, research, disaster relief, and public education, among others.
  • Failure to recognize contributions of services that meet the recognition criteria or recognizing
    contributed services that do not meet the criteria as discussed in paragraphs 16-17 of FASB ASC 958- 605-25.
  • Not reporting contribution revenue for gifts-in-kind (free or below-market rent, services provided by another organization, donated supplies, donated media, and so on.)
  • Not reporting costs of soliciting contributions, including costs of soliciting contributed services that do not meet the recognition criteria, as fundraising costs.

The Statement of Cash Flows may have the following financial statement errors:

  • Failing to display donor restricted capital-type contributions (permanently restricted gifts, gifts restricted for acquisition of property) as a financing activity.
  • Failing to display information about noncash gifts for endowment or property, plant and equipment purposes.
  • Failing to disclose indebtedness incurred for the acquisition of assets as a noncash activity.
  • Netting amounts for purchases and sales of property, plant and equipment.
  • Improperly reporting unrestricted contributions that were subsequently designated by the governing board for long-term purposes as a financing activity rather than an operating activity.
  • Failure to report as investing activities the cash flows from purchases, sales, and insurance recoveries of unrecognized, noncapitalized collection items.

The Statement of Functional Expenses may have the following financial statement errors:

  • Failing to include certain expenses in the statement (for example, expenses netted against revenues or non-operating expenses).
  • Failing to include the statement when one is required (voluntary health and welfare entities).
  • Management and general expenses are inappropriately or completely reallocated to other functional categories. For example, costs associated with soliciting funds other than contributions, including applications for and administering certain grants and contracts, are allocated to program services or fundraising activities.
  • Within the listing of natural expenses in a Statement of Functional Expenses, including a function or program line item. For example, within the listing of natural expenses listing the line item “grant expenses” which might have already been allocated such items as payroll, occupancy and supplies.

The Notes to the Financial Statements may have the financial statement errors:

  • Failing to include the required disclosure for summarized financial information.
  • Failing to disclose an adequate description of the organization’s activities, including each major class of
  • Failing to disclose the capitalization policy for property, plant and equipment.
  • Failing to disclose discount rates used in present value measurements, such as in measuring unconditional promises to give or split-interest agreements.
  • Failing to disclose information about the nature of temporary or permanent restrictions on net assets.
  • Failing to disclose information about the programs or activities for which contributed services were used.
  • Failing to present reclassifications which are in effect corrections of errors as restatements. However when reclassifications are not corrections or errors, failing to describe the nature of reclassifications made to prior-year amounts to conform to current year presentation when such reclassifications are significant, even if such reclassifications had no effect on the prior year’s change in net assets.
  • Failing to disclose total fundraising costs. When a statement of functional expenses is presented and certain fundraising costs have been netted against revenue, such netted costs need to be included in total fundraising costs.
  • Failing to disclose total program expenses if the components of total program expenses are not evident from the details provided on the face of the statement of activities (for example, if cost of sales is not identified as either program or supporting services).
  • Failure to disclose material related party transactions as set forth in FASB ASC 850-10. Related parties include, but are not limited to, the following: officers, board members, founders, substantial contributors, and their immediate family members; members of any related party’s immediate family; parties providing concentrations in revenues and receivables; supporting organizations; financially interrelated entities; or other entities whose officers, governing board members, owners, or employees are members of the NFP’s governing board or senior management, if those individuals have significant influence to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

We hope you find this list helpful as your review and evaluate your current financial statements.   The notes to the financial statements are typically only included in the audited financial statements which means the organization is typically unaware of these disclosures.  We work with our clients on a daily basis to review and update the financial statements on a regular basis so let us know if you would like us to review and update your financial reports.

Are you in Compliance with ASU 2016-4? Financial Statement Presentation of Not-for-Profit Entities

Update:

White Paper Available: “Understanding. Preparing. Implementing.  FASB ASU 2016-14 reporting requirements for Not-for-Profit Organizations

Overview

In November 2011, the Financial Accounting Standards Board (FASB) added a project to its agenda focusing on the financial reporting of not-for-profit (NFP) entities. The project has resulted in the issuance of Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. The update strives to improve how a NFP organization classifies its net assets and provides information in its financial statements and notes about its financial performance, cash flows and liquidity.  We have summarized the full 270-page standard into this brief guide which outlines the primary changes to the financial statements of not-for-profit organizations.

Net Asset Classes

  • Replaces the current three net asset classes with the following two:
    • Net assets with donor restrictions
    • Net assets without donor restrictions
  • Removes hardline distinction between temporary and permanent restrictions
  • Enhances disclosure requirements:
    • Amounts and purposes of board-designated net assets
    • How restrictions affect the use of resources

In order to implement the new changes, you will need to modify your financial report formats and chart of accounts to insure your internal financial reports are modified for the new financial reporting requirements.  You will need to determine appropriate level of disaggregation of the net assets for Statement of Financial Position, Statement of Activities, and footnote disclosures.

Underwater Endowments

  • Presents deficits relative to original gift amounts of donor-restricted within the donor-imposed restrictions class of net assets
  • Enhances disclosure requirements:
    • Governing board’s policy related to appropriations from such funds
    • Any action taken during the period related to such funds
    • Original gift amount or level otherwise required to be maintained by the donor or law
    • Amount of the underwater endowments in the aggregate

In order to implement the changes, you will need to recast your note to conform to the new two net asset categories.  Remember that the underwater portion of endowments is now presented entirely in net assets with donor restrictions.  The investment return is now presented net of external and direct internal investment expenses, and does not require a separate break-out of the components of investment return.

Expiration of Restrictions – Long-lived Assets

  • Requires use of the “placed-in-service approach” for determination of when restrictions expire
  • No longer allows the recognition of the expiration of restrictions over the asset’s useful life

Statement of Cash Flows

  • May continue to elect either the direct or indirect method
  • When using the direct method, no longer requires the reconciliation of changes in net assets to cash flows from operating activities

Liquidity and Availability of Resources

  • Requires disclosure of qualitative information about how liquid resources are managed
  • Requires disclosure of quantitative information related to availability of financial assets to meet cash needs for general expenditures within one year, including impact of the following on financial assets:
    • Nature of the financial assets
    • External limits by donors, grantors, laws and contracts
    • Internal limits by the governing board

In order to implement the changes, you will need identify all financial assets, and any limitations on availability for expenditure in the next 12 months.   You will need to determine the format to present the required quantitative disclosure.   You can either display amounts of financial assets then adjustments to arrive at an available for expenditures amount or you can display only the net amounts available for expenditure.  You could determine whether presenting a classified statement of financial position could enhance or simplify the quantitative disclosure requirements considering other effects elsewhere in the financial statements and related notes.  You might want to develop a formal policy for managing the organization’s liquidity needs which might be disclosed in the qualitative portion of the note disclosure.

Investment Return

  • Requires external and direct internal investment expenses to be net against investment returns
  • Removes requirement to disclose amount of investment expenses net against investment returns
  • Clarifies what activities constitute direct internal investing activities:
    • Salaries and related expenses of staff responsible for the development and execution of investment strategy
    • Allocable costs associated with internal investment management and supervising, selecting, and monitoring of external investment management firms
  • Permits separate, appropriately labeled line items on the statement of activities for net investment return managed differently or derived from different sources
  • Eliminates the requirement to present investment return components for changes in endowment net assets

Reporting of Expenses

  • Requires all NFPs to report expenses by nature
  • Retains requirement to report expenses by function
  • Requires expense analysis by nature and function to be presented in one location, in either:
    • The statement of activities
    • A separate statement of expenses (similar to the statement of functional expenses)
    • A schedule in the notes
  • Enhances disclosures related to methods used to allocate costs among functions
  • Updates descriptions of management and general activities

In order to implement the changes, you will need to determine where and how to present all expenses by nature and function in one place which might a in the statement of functional expense, statement of activities, or a note to the financial statements.  You will need to evaluate whether your current accounting system will support preparation of this required information.  You will need to develop formal allocation methodologies to be used to allocate expenses among program and supporting services categories.  You will need to draft note disclosure of the methods utilized in the expense allocation process.  It might be time to put together a formal cost allocation plan.

Effective Date and Transition

  • Annual financial statements issued for fiscal years beginning after Dec. 15, 2017
  • Early application is permitted
  • Requires adoption on retrospective basis for all years presented, except for:
    • Analysis of expenses by nature and function
    • Disclosures related to liquidity and availability of resources

Don’t forget to take advantage of our free resource.   “Understanding. Preparing. Implementing.  FASB ASU 2016-14 reporting requirements for Not-for-Profit Organizations

Essential Nonprofit Financial Governance – Frequently Asked Questions (FAQs)

We will cover 15 commonly asked questions and mis-perceptions of financial governance. Please provide this to your board and especially new board members and leaders to help educate them on the roles and responsibilities on Nonprofit Leadership and Governance. Please register for our November forum to review this topic in more detail and invite your board treasurer, finance committee, and leaders.

  1. How many board members should we have?  At least 5-9 members which are unrelated to each other.
  2. What should be discussed during a board orientation? Mission, organization chart, bylaws, audit and form 990, responsibilities and expectations including fundraising, and frequency of board and committee meetings.
  3. Are there best practices for planning and conducting meetings?  Draft agenda in advance and be strategic and focus attention on priorities.  A consent agenda can be a good tool to move through routine procedures and information that can be provided prior to the meeting.
  4. Do I have to have an audit or finance committee?  Organization’s benefit from a finance committee and may benefit from an independent audit committee.  It is important to have the right financial experts to move you in right direction.
  5. Do I have to have accounting or finance experience to serve on a board?   A successful board is generally made up of diverse individuals who are focused on furthering the mission of the organization.  Board members may need training to fulfill their fiduciary responsibilities.   It might be best for these board members to not serve on the finance or audit committee however.
  6. Are Not-for-Profits supposed to have term limits?  Term limits seem to be a good idea yet make sure you have a staggered term process to support continuity and prevent large turnover of board members.  It might be import to change the responsibilities of long-term board members to keep them engaged and refresh their duties.
  7. Is it common for board members to have fundraising expectations?  Asking board members is very common and especially expected if donations is a major revenue source.  It is always a good idea to know the fundraising expectations and make sure you are comfortable with the commitment.
  8. What is a conflict of interest?  a conflict of interest arises with a board member has a transaction with the organization.  Transactions should be discussed and possible disclosed before they take place.  A robust conflict of interest policy covering the financial and non financial conflicts is a means to establish procedures that will offer protection against charges of impropriety involving officers or directors.
  9. Are not-for-profits required to have an annual audit?  It depends on many triggers that may cause or require an audit.  Receiving federal or state funds over certain thresholds can trigger audit requirements.  Some foundation grants may have audit requirements as well.    Some organization’s may choose to have an audit even when not required to demonstrate good financial stewardship and transparency.
  10. What alternatives exist to an annual audit?  A review typically costs 50-60% of an annual audit.   A compilation is another option but does not provide a basis for obtaining or providing assurance regarding the financial statements.
  11. What should board members know about the Form 990?  It is a public document and should be reviewed by the board before it is filed with the Internal Revenue Service.  Board members should fully understand and verify the information on the Form 990, and should feel comfortable asking questions until they are satisfied.
  12. Am I required to post my financial information on my website?  There is no federal requirement to provide your financial information on your website.  The IRS requires you to make your Form 990 publicly available.    In the interest of transparency, it is considered a good industry practice to post the IRS Form 990 and the annual financial statements.  The annual financial statements might be the audited financial statements and/or the annual report.
  13. Should we have an operating reserve?  An operating reserve is a valuable tool to manage changes to the finances.  By building and maintaining an operating reserve, an organization can better manage its cash flow on a day-to-day basis.
  14. How long do I keep my financial records?  There is no easy answer for this as many laws are state specific and federal government grants may have specific requirements for document retention.  A formal document retention and destruction policy is considered an important best practice.
  15. Are not-for-profits allowed to make a profit?  They should and a modest surplus maybe a good goal as well.  This will allow the organization to build up reserves and helps to contribute to long-term financial sustainability.    The term not-for-profit comes from the fact that the organization exists to benefit the public and has no owners.

Please be advised that this is only an introduction to financial governance and does not address all the areas that an organization should be concerned with.  We would be glad to assist your organization with training and make sure you meet the requirements of financial governance and leadership.

What is the best way to segregate financial duties in a small to medium sized Nonprofit?

Small to medium sized NPF’s struggle with segregating financial duties. Volunteers and Outside experts may play key roles in ensuring the proper segregation of duties. The best course is to segregrate duties to minimize risks and prevent fraud. The following reference charts are available for organizations with two, three, or four employees involved in the outsource function. If you only have one employee, we would recommend including our firm or another outside expert or volunteer to help with segregation of duties.

The following reference charts are provided to provide examples of segregation of duties.  Please contact us before you implement any of these suggestions.

Sample Organization with two employees

Sample Organization with three employees

Sample Organization with four employees

This would allow be good time to evaluate your financial department including updating your financial policies and procedures manual for the finance departments responsibilities.

2018 Central Indiana Nonprofit Salary Survey is Available

2018 Central Indiana Nonprofit Salary Survey is Available

By Jim Simpson, CPA and director, Financial Technologies & Management

It is becoming more difficult to attract and retain talent.  Also, it is important to review your salaries and benefits compensation compared to the market.  It is becoming clear that long term-sustainability and staff retention with competitive wages are linked.  We have provided this resource through our free white paper so please feel free to download this resource.

We hope this resource will help to provide nonprofit leaders from all service sectors and sizes to explore compensation and benefits for over 25 typical positions with the ultimate goal or attracting and retaining the talent to achieve your organization missions.

We serve quite a few clients outside this service area so we thought we would share it to all as the sample size is almost twice the typical sample size and is provided at no charge by Charitable Advisors and their sponsors which we have been in the past.

We invite you to download ‘2018 Central Indiana Nonprofit Salary Survey

Financial Technologies Management LLC (FTM) has been serving the accounting services and technology needs of nonprofits since 1999. Our exclusive focus on nonprofit organizations means we have the experience and proven track record to guide you to the best combination of accounting resources to provide the optimal capacity, utmost stewardship and ability to fulfill your mission.

Abila MIP Fund Accounting and Abila MIP Advance Version 2019. 1 Available and Current MIP Promotions includes FREE Payroll and/or HR

What’s New in Abila MIP Fund Accounting Version 2019.1

Tax Enhancements Completed:

  • New Jersey Tax Updates
  • Maryland Tax Updates
  • Illinois Tax Updates
  • MIP: Aatrix – Add Oregon State Transit Tax code #5666 to Maintain Other Taxes

Reporting Enhancements Completed:

  • MIP: Financial Statements – Includes an option to add the Unposted Transactions to the Balance Sheet and Statement of Financial Position reports to allow more flexibility and understanding of current financial state.

Security Enhancements Completed:

  • MIP: Attachments – Enhances the attachment encryption process when encrypting documents using a new, modern algorithm.
  • MIP: Added a reminder message to both Forms Designer forms when the Insert Picture (related to signatures) is selected and both ACH forms.

Administration Enhancements Completed:

  • MIP: Data Integrity Checks – The Organization Name has been added to the results message for clarification.

Payroll Enhancements Completed:

  • MIP: Employee Information – A change was made to the employee page where the Social Security Number is entered.  If not entered at this time, a warning message will be displayed but the user can continue onwards, in order to match the functionality in the HR module for increased usability.
  • MIP: Payroll – The Timesheet Reference field now flows through several parts of the application to allow tracking and reporting on large numbers of employees.  It will flow through the calculation and history processes, as well as thru the processing and historical reports. Additionally, in Forms Designer, “Add Timesheet Reference” will be made available as a Data field.
  • Changes made to address new payroll requirements in Arizona
    • MIP: Set Up Modules – Payroll – Added checkbox ‘Include Historical Pay Code Information on Stubs’ and changed Print Checks/Vouchers and Reprint Stubs to enable display of changes made for the AZ tax code payroll changes.

Resolved Issues

With the 2019.1 release, we resolved 18 outstanding defects, including three HR defects. Defects

included in DLL releases from 2018.1 to 2019.1 are also included in this list.

FA‐20024 An ARS session allows duplicate document numbers to be created. For those document numbers that are used twice in one session, AR reporting doubles the amounts on the report output

FA‐21915 Aatrix: Info in AUF not Sorted or Grouped Properly

FA‐22185 The posting process taking an excessive amount of time

FA‐22929 MIP Closes when attempting to export report to XLS using the Red Door

FA‐23145 Changing one Employee in Review/Modify for a Supplemental Payroll triggers all employees to be recorded in the Summary Organization Audit with no associated user ID

FA‐23149 Appending or Prepending to an Excel Worksheet Removes Decimals That End in 0

FA‐23201 After exporting a report to Excel, formulas create #VALUE!

FA‐23262 Hourly Rate Change on Salaried Employees Does Not Save

FA‐23281 Append to Excel files with file type XLSM Fails (macros)

FA‐23316 HR: ‘dg2_initializeLayout’ error when adding Certificates in HR 2 14 of the defects on this list were from the prioritized Support Top 25 defects list.

FA‐23320 Rename Employee is Creating New Employees Instead of Renaming

FA‐23339 HR: Payroll Check printing rather than voucher

FA‐23343 HR: Misspelling in Ethnic Drop‐Down Options

FA‐23376 Some Report Types Printed from Excel Exported from MIP are Improperly Formatted

FA‐23395 Electronic Funds files have wrong Object Count when filler rows not included on a Data File ending in a perfect 10 count

FA‐23437 Reprint Pay Stub subtracts Workers Comp from Net Pay

FA‐23445 Reprint Pay stubs Produces Incorrect YTD Earnings for Local Taxes

FA‐23605 After applying the DLL to fix FA‐23281, Running the Bank Rec report to screen causes MIP to close. It also replaces the ‘from’ field

with the name of the database rather than the email address of the user attempting to email a report.

Abila MIP Advance™

The focal point of the 2019.1 release was the debut of the MIP Advance™ Reporting module.  Extensive refinement to the UI along with the introduction of 57 previously unreleased reports are the highlight of the features included here. See below for more detailed information.

Reporting

New Reports ‐ Inclusion of 57 new reports to the Advance user interface. A list of report

categories and sub‐categories is included below.

 Aged Payables, Detail A/P Ledger, Invoices Selected for Payment, Summary A/P Ledger, Vendor 1099 Adjustments List, Vendor Activity, Vendor Information List

 Aged Receivables, Customer Activity, Customer Information List, Detailed A/R Ledger, Summary A/R Ledger

 Bank Reconciliation – Checks/Vouchers, Combined Reconciliation, Deposits, Other Cash Items, Suspense Items

 Budget – Budget Worksheet, Detail Budget/Actual Transactions, Posted Budget Transactions, Summary Budget Comparison, Unposted Budget Transactions

 Check/Voucher Register

 Financial Statement – Balance Sheet, Combining Balance Sheet, Statement of Cash Flows, Combining Statement of R&E, Statement of Activities, Statement of Cash Flows, Statement of Financial Position, Statement of R&E, Statement of Revenues and Expenditures by Period

 General Ledger Analysis – Comparative Trial Balance, Expanded GL, Normal Trial Balance, Standard GL, Working Trial Balance

 Journals – Cash Journal, Expenditure Journal, Revenue Journal

 Lists – Account Code Combinations, Attachments, Chart of Accounts, Closing Account Assignments, Distribution Codes, Email Templates, Financial Statement Format, Group Information, Offset Account Assignments, Report Group Assignments, Security, UDF Default Sources, User Defined Fields, User Information List

 Transactions – Memorize/Recurring Transactions, Unposted GL Transactions, Posted GL Transactions

Current MIP Promotions:
Prospect Promotion:
Free Payroll, HR, or both for 1 year: On Premise only pays M&S after year one; Subcription gets 12 months free
Client Promotion: Migrate to Advance for on-premise clients with 3 months free with 15 month contract; Free Module with Renewal for 12 months and choose from select modules; Renewal Amnesty for clients 6 months overdue may pay only a 50% catch up fee.

Why your Nonprofit should consider using Nonprofit Accounting Software?

Why your Nonprofit should consider using Nonprofit Accounting Software?

By Jim Simpson, CPA and director, Financial Technologies & Management

Your organization like every other nonprofit is feeling the pressure to deliver more transparency. The demand for more timely information is coming from a multitude of interested parties: board members, major donors, potential funders, and watch dog organizations.

The goal of transparency can’t be easily accomplished without sound nonprofit accounting software-financial reporting is the foundation upon which transparency is achieved.

As the number of nonprofits have proliferated, accounting software is more tailored and can help manage these complexities. But taking the time to select the right software for your nonprofit is critical.

Before your purchase, start with a software evaluation and assessment to see if you’re a good candidate for nonprofit accounting software. The software evaluation and assessment will review your current system to determine its level or utilization and functionality. It is probably a good idea to perform a software evaluation any time there is a major change within the organization either positive or negative.

Here are eight reasons Nonprofit’s should consider Nonprofit Accounting Software.

  1. Flexible report writer
  2. Grants Management capability
  3. Budget Management capability
  4. Cost-allocation functionality
  5. Strong audit trails
  6. Integration with payroll, fundraising, and other applications
  7. Expanded capabilities as organization grows
  8. Various financial segment or element tracking to include funding sources, programs, projects, locations, and other essential financial information.

Here are features and functionality of the software that can provide optimum efficiency.

The flexible report writer allows you to use the accounting software to meet the internal and external complex reporting requirements. Generating reports should be able to be varied to meet the board, program, and funder reporting requirements and easily modified to meet the changing program and funder needs. Accounting Solutions for your Nonprofit

The grants management capability allows you to track the financial results for each grant, and report back to the funder in the required format, using one accounting system.  Grants management helps to insure maximum reimbursement and reconciliation to claims including encumbrances.

The budget management capability allows you to manage multiple budget versions for board approved version and projections.  Easily make budget revisions and maintain budget trail to track various revisions.   Budget management allows you to distribute annual budget monthly, quarterly, or annually.

Cost-allocation functionality allows you to easily allocate transactions on a real-time basis to multiple programs and funding sources all within the system. It should allow to you to pool various cost pools like facilities and overhead and allocate these to the various program and funding sources to provide a full-cost accounting.  Allows the cost allocation basis like hours worked to be modified on a regular basis for more accurate funding source and program accounting.

Strong audit trails keep track of what users are doing within the accounting system. The system should allow you to provide your annual auditors and program monitors with the financial information they need to meet their requirements and reduce the chances of fraud. Those involved in the finance function should have segregated permissions in the accounting system to protect the organization and its staff.  Strong audit controls include the ability for management to produce the audited financial statements.

As organizations look to be more efficient, it is important they look at software that allows them to integrate their critical functions like payroll, fundraising, human resources, and other areas. Nonprofit accounting software typically has this functionality built into its various modules or it allows for third party product integration. It is typically modular based, which allows your organization to add functions and capabilities as the organization grows and needs additional tools.

One of the most important reasons to look into nonprofit accounting software is the ability track financial information different ways.

For example, an organization may want to track its various funding sources to see what funds are available. It may want to track my various programs and projects to see what the programs costs are and how the organization is doing financially. It might have various locations and want to know how each location is doing. It might have donor and endowments restricted assets and wants to do a separate accounting for these donations to know what assets are left and make sure donor restrictions are met.

It is important, too, that staff remains efficient and effective, enabling them to focus on the long-term planning of the organization and not just keeping up with the day-to-day-accounting.

There are several purchase options that include direct purchase or subscription pricing to pay-as-you-go.

You will need to insure that you include software advisory services to include planning, implementing, and training. In some cases, you will need to also include data conversion and integration services.

Please contact us to help you determine if your organization will benefit from Nonprofit Accounting Software.  We will help you with your software evaluation and assessment project.

Assess Your Organization’s Vulnerability to Fraud

It’s a people problem, so combat it with governance.   

Purchasing schemes, cash skimming, and financial statement fraud are three very different types of fraud that nonprofits must prevent, detect, and insure against. Still, behind each of them – and every variety of deliberate, deceptive act against nonprofits – there’s a fundamental and shared dynamic at play.

Fraud isn’t just an operational or financial risk. It’s inherently a human risk, meaning it often crosscuts numerous functions and departments within a nonprofit organization. Not only that, but the people behind these acts are complex. They’re pressured by varying circumstances, motivated by different opportunities, and self-assured by their own unique rationales. Making matters more complicated, fraud isn’t always a solo act. In fact, a report by the Association of Certified Fraud Examiners (ACFE) found that 46% of fraud cases involve multiple perpetrators. When fraud occurs, the web of nefarious activity often extends to surprising depths within an organization.

To combat this threat, nonprofits face a critical need to address fraud, starting with more guidance and engagement from leaders and boards to create an anti-fraud environment and oversee a fraud risk management function. One of the most important deterrents of fraud is knowing that the organization’s leaders have no tolerance for it, will act accordingly to detect it, and will take appropriate action if they find it. Begin by focusing on these four steps:

1. Find a Catalyst

You need a high-ranking sponsor to get fraud risk management off the ground. This leader’s first order of business should be deciding whether the organization’s fraud risk management will be integrated into the existing risk management function (which typically focuses on strategic, operational, reporting, and compliance risks) – or whether it will be separate. Either way, the goal is the same: Embed a risk management element into the daily activities of all your personnel.

2. Create Responsibilities & Structures

With your management process in place, establish a governance structure for it, including designated oversight responsibilities at the board level, such as an audit committee. Keep in mind, this framework and the tools your organization uses should be scaled to fit both your size and your available resources. It’s impossible to completely “fraud-proof” any organization, so understand the weak points in your infrastructure and organization, and then work backwards to execute your anti-fraud processes. Also, while fraud prevention is ideal, many nonprofits have to weigh the costs and practicality of preventive processes versus detective measures.

3. Engage & Educate

Especially when faced with resource constraints, nonprofits should engage all their staff in an ongoing system of fraud deterrence. Above all, provide your employees with workshops and trainings in which you educate them on why people perpetrate fraud, which red f lags to watch for, and what resources – such as whistleblower policies, reporting systems, and hotlines – are available to them. Awareness throughout your organization can be the single most effective fraud deterrent and vehicle for detection, but it has to start from the top.

4. Craft Dynamic Risk Assessments

People are dynamic, so your risk assessments must keep pace. With roles and responsibilities identified, use your team to pinpoint which inherent risks exist. Then prioritize these risky situations based on their impact, likelihood, and the speed at which they’re apt to occur. Finally, use those priority rankings to map the best preventive and detective controls.

Source: “Assess Your Organization’s Vulnerability to Fraud”. Nonprofit World. October/November/December 2017. Vol. 35, No. 4: 20 – 21. Print.